Abstract
We examine interfirm wage differentials among fast-food restaurants in Atlanta, Georgia to determine the degree to which these differentials correspond to the predictions of competitive theory. While no definitive test is possible, given our inability to control all sources of wage variation, the evidence nevertheless suggests that the wage structure is largely shaped by competitive forces, albeit in a relatively complex manner due to differences in a host of factors that the simple version of the theory holds constant. Evidence is also found, on the other hand, that the supply curve of labor to the individual firm slopes upward for experienced workers and that a small noncompensating wage differential may exist that is related to variation in each restaurant's ability to pay.
Similar content being viewed by others
References
Becker, Gary. Human Capital. New York: National Bureau of Economic Research, 1963.
—. The Economic Approach to Human Behavior. Chicago: University of Chicago Press, 1976.
Card, David, and Alan Krueger. Myth and Measurement: The New Economics of the Minimum Wage. Princeton: Princeton University Press, 1995.
Chamer, Ivan, and Bryan Fraser. Fast Food Jobs. Washington, D.C.: National Institute for Work and Learning, 1984.
Dickens, William, and Lawrence Katz. “Inter-Industry Wage Differences and Industry Characteristics.” In Kevin Lang and Jonathon Leonard, eds., Unemployment and the Structure of Labor Markets. New York: Basil Blackwell, 1987, pp. 48–89.
Eberts, Randall. “An Empirical Investigation of Intra-Urban Wage Gradients.” Journal of Urban Economics 10 (July 1981): 50–61.
Freeman, Richard. “Does the New Generation of Labor Economists Know More than the Old Generation?” In Bruce E. Kaufman, ed., How Labor Markets Work. Lexington, Mass.: Lexington Books, 1988, pp. 205–32.
Friedman, Milton. Essays in Positive Economics. Chicago: University of Chicago Press, 1953.
Groshen, Erica. “Five Reasons Why Wages Vary among Employers.” Industrial Relations 30 (Fall 1991): 350–81.
—. “Sources of Intra-Industry Wage Dispersion: How Much Do Employers Matter?” Quarterly Journal of Economics 106 (May 1992): pp. 869–84.
Hicks, John. The Theory of Wages. New York: MacMillan, 1932.
Ihlanfeldt, Keith. “Intraurban Wage Gradients: Evidence by Race, Gender, Occupational Class, and Sector.” Journal of Urban Economics 32 (July 1992): 70–91.
—, and Madelyn Young. “The Spatial Distribution of Black Employment between the Central City and the Suburbs.” Review of Economics and Statistics 76 (August 1994): 425–33.
Kaufman, Bruce. “The Post-War View of Labor Markets and Wage Determination.” In Bruce Kaufman, ed., How Labor Markets Work. Lexington, Mass.: Lexington Books, 1988, pp. 145–203.
—. “ The Evolution of Thought on the Competitive Nature of Labor Markets.” In Clark Kerr and Paul Staudohar, eds., Labor Economics and Industrial Relations: Markets and Institutions. Cambridge, Mass.: Harvard University Press, 1994, pp. 145–88.
Kerr, Clark. “Labor Markets: Their Character and Consequences.” American Economic Review 40 (May 1950): 278–91.
Krueger, Alan. “Ownership, Agency, and Wages: An Examination of Franchising in the Fast-Food Industry.” Quarterly Journal of Economics 106 (Fall 1991): 75–101.
—, and Lawrence Summers. “Reflections on Inter-Industry Wage Structure.” In Kevin Lang and Jonathon Leonard, eds., Unemployment and the Structure of Labor Markets. New York: Basil Blackwell, 1987, pp. 17–47.
Leonard, Jonathon. “Wage Structure and Dynamics in the Electronics Industry.” Industrial Relations 28 (Spring 1989): 251–75.
Marshall, Alfred. Principles of Economics. 8th ed. London: MacMillan, 1923.
Mincer, Jacob. Schooling, Experience, and Earnings. New York: National Bureau of Economic Research, 1974.
Rees, Albert, and George Shultz. Workers and Wages in an Urban Labor Market. Chicago: University of Chicago Press, 1970.
Reynolds, Lloyd. The Structure of Labor Markets. New York: Harper, 1951.
Stigler, George. Five Lectures on Economic Problems. London: Longmans, Green, 1949.
—. “Information in the Labor Market.” Journal of Political Economy 70 (October 1961): 94–105.
Topel, Robert. “Local Labor Markets.” Journal of Political Economy 94 (June 1986): S111-S143.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Young, M.V., Kaufman, B.E. Interfirm wage differentials in a local labor market: The case of the fast-food industry. J Labor Res 18, 463–480 (1997). https://doi.org/10.1007/s12122-997-1051-2
Issue Date:
DOI: https://doi.org/10.1007/s12122-997-1051-2